November 21, 2011 / 12:38 PM / 7 years ago

UPDATE 2-Silvercorp to buy China's SX Gold for $23 mln

* Silvercorp to buy SX Gold for about $23 mln

* SX Gold’s XHP mine located near other Silvercorp mines

* Silvercorp shares down in pre-market trading in the US (Adds details on deal, background; In U.S. dollars)

Nov 21 (Reuters) - Silvercorp Metals Inc (SVM.TO) said on Monday it will buy China’s SX Gold Mining Company for about $23 million, in a move aimed at consolidating its holdings in China’s Henan province.

Silvercorp’s Henan Found Mining Co subsidiary signed a share purchase agreement to acquire a 100 percent equity interest in SX Gold, following an auction arranged by the Luoyang City government to sell the asset.

Vancouver-based Silvercorp is one of several Sino-Canadian companies hurt this year by allegations of fraud. A recent KPMG review of the company’s financials appears to have cleared it of most of the anonymous allegations leveled against it. [ID:nN1E79N0A5]

Following the KPMG report last month, Silvercorp Chief Executive Rui Feng said the company would now refocus on building value for its shareholders through ventures such as mining, exploration and resource development.

SX Gold owns the XHP silver-gold-lead-zinc mine located 120 kilometres (74 miles) southwest of its Ying mine. The XHP mine is also located just 6 km away from the XBG mine, which it acquired in August.

The company said it has already paid $19.6 million toward the acquisition and the balance is due on the completion of the transaction and transfer of mining permits to Henan Found.

Shares of Silvercorp, which closed at $7.90 on Friday on the New York Stock Exchange, dropped 3.8 percent at $7.60 in light trading before the morning bell. (Reporting by Euan Rocha in Toronto and Arnav Das Sharma in Bangalore; Editing by Sreejiraj Eluvangal and Frank McGurty)

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